OMAHA, Neb.—A federal appeals panel on Friday upheld an eastern Nebraska city’s ban on renting to people who aren’t in the U.S. legally, opening the door for the town of Fremont to begin enforcing its law and offering implications for other cities with similar ordinances.

Fremont voters handily approved a measure in 2010 that bans hiring or renting to people who can’t prove they are in the country legally.

Last year, U.S. District Judge Laurie Smith Camp ruled that parts of the ordinance denying housing permits to those not in the country legally were discriminatory and interfere with federal law. But the city has been enforcing its requirement that businesses use federal E-verify software to check on potential employees.

On Friday, two judges of a three-member panel of the 8th U.S. Circuit Court of Appeals rejected that reasoning, leading the majority to reverse the ruling and vacate the lower court’s injunction against that part of the ordinance.

Judge James Loken wrote that the plaintiffs failed to show the law was intended to discriminate against Latinos or that it intrudes on federal law.

Lawyers for the plaintiffs said they will confer with their clients before determining whether to ask the full 8th Circuit to review to the case.

The ruling appears counter to decisions in other courts on similar local laws, said Aaron Siebert-Llera, an attorney with the Mexican American Legal Defense and Educational Fund who represented several U.S.-born Latino home renters and a Fremont landlord who challenged the ordinance.

Siebert-Llera noted that two other federal appeals courts ruled against the communities of Farmers Branch, Texas and Hazelton, Pa., which have similar laws targeting landlords and employers to dissuade them from renting to or hiring people in the country illegally. Both cities have appeals pending before the full federal circuit courts.

“You’ve got the U.S. Senate passing sweeping immigration reform. You’ve got this huge, nationwide change going on,” he said. “Then you have a decision like this coming out.”

The American Civil Liberties Union, which also sued over Fremont’s ordinance, bashed the 8th Circuit opinion.

“The court majority failed to recognize that Fremont’s attempt to exclude undocumented immigrants from the city’s borders is not only un-American, it’s unconstitutional,” said Jennifer Chang Newell, an attorney for the ACLU’s Immigrants’ Rights Project.

Eighth Circuit Judge Steven Colloton agreed with the reversal and vacating of the injunction, but said the plaintiffs lacked standing in the case, meaning they did not show how they had been or could be harmed by Fremont’s law.

Siebert-Llera took issue with that opinion, noting that one of the plaintiffs showed she was forced to buy a mobile home, because she could not find anyone who would rent to in Fremont.

In a dissent, Judge Myron Bright agreed with the lower court that parts of the ordinance interfere with federal law.

“The ordinance will impose a distinct burden on undocumented persons by preventing them from renting housing in Fremont,” Bright wrote. “This denial of rental housing is paramount to removal from the city. And, as the Supreme Court has made clear, removal is entrusted exclusively to the federal government.”

Kris Kobach, a Kansas attorney who represented Fremont and helped draft its ordinance and others around the country, lauded Friday’s opinion and said it will have implications for both Farmers Branch and Hazelton as appeals courts look at their ordinances.

“And I think it has indirect implications for cities all across the country, and certainly cities in Nebraska, that may wish to take similar steps to stop the negative effects of illegal immigration,” Kobach said.

Kobach said as soon as next week, the city will begin enforcing the part that requires all renters in the city to apply for an occupancy permit and denies those permits to people not legally in the country.

The ordinance stirred a whirlwind of controversy in June 2010, when roughly 57 percent of Fremont voters who turned up at the polls supported it. The measure catapulted the city into the national spotlight and spurred comparisons with Arizona and other cities embroiled in the debate over immigration regulations.

Fremont, about 35 miles northwest of Omaha, has seen its Hispanic population surge in the past two decades, largely due to the jobs available at two meatpacking plants just outside the city. Census data show the number of Hispanics soared from 165 in 1990 to 3,149 in 2010.

It’s unknown how many immigrants not legally in the country may live in Fremont. According to census figures, 1,259 noncitizens live there, but that figure includes people living in the U.S. legally.

Fremont city officials declined to comment Friday, saying they wanted time to review the ruling.

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